Monday, August 10, 2009

FaceFeed - Facebook acquired FriendFeed, FriendFeed is a failure, and garage dreamers should wake up

I learned about Facebook's acquisition of FriendFeed via a Robert Scoble tweet and have since commented upon posts by Scoble, Louis Gray, and Anika Malone, and have also read comments from Steven Hodson, Duncan Riley, Steve Rubel, and Jason Kincaid.

Perhaps I can sum up my views as follows:

First, remember that Facebook acquired FriendFeed, not the other way around.

I shared this story back in July:

Now normally when Company A buys Company B, there is a transition period until Company B's name is retired to the dustbin of history. I live in southern California, and when Wells Fargo Bank acquired Crocker National Bank in 1986, I recall that Wells Fargo suddenly began airing a number of commercials that trumpeted both Henry Wells and Charles Crocker. But after a brief period, those commercials stopped, and the name of Charles Crocker was never publicly uttered by Wells Fargo again.

Over the next few days, Facebook will parade Paul and Bret around to soothe the minds of ruffled FriendFeed users while they talk about shared vision, but Paul and Bret are smart enough to know that Mark Zuckerberg is signing their paychecks from here on out - at least until they leave to pursue new opportunities - and as long as they're on Facebook's payroll, their job is to improve Facebook. We may wish for the former FriendFeed employees to remain as a standalone R&D unit, but in reality the FriendFeed employees will be assigned to help the Facebook employees put cool features into Facebook.

Second, we have to consider why this happened.

Because FriendFeed is probably my favorite service at the moment, much of what I read is from fellow FriendFeeders like Scoble, Gray, Malone, and the like. Because of this, I am getting a very distorted view of reality - and perhaps Scoble, Gray, and Malone are too, unless they take a moment to think about it.

The reason that this happened is because FriendFeed is a miserable failure. Oh sure, it has wonderful features - wonderful enough for Facebook to be copying them well before the announcement. But in the two biggest business measures, revenue and number of users, FriendFeed is a nonentity.

Let's look at revenue. Actually, don't bother, because you won't find it. As I noted in my contrarian post of May 26:

Many people, myself included, have been critical of Twitter's delay in announcing its monetization strategy. I have maintained that a monetization strategy needs to be addressed quickly, since monetization affects many other issues. A Twitter subscription service, for example, would dictate lower traffic than a free-to-use Twitter service funded by advertisements. Yet while people have been complaining up and down about Twitter's failure to monetize itself, there has been a strange silence about FriendFeed's monetization plans, if any. Are they going to wait a few years before they hire a product manager to figure a monetization strategy out?

Well, it turns out I was wrong. The FriendFeed monetization strategy was to wait a few months and cash in. A valid monetization strategy to be certain, but not one suited to a long-term company plan.

And the reason that FriendFeed didn't hang in for the long haul was because of the paltry number of users. Now if you go out on the street, you'll find that people have generally heard about Facebook, and (post Oprah) they've heard about Twitter. But if you leave the circles that I usually inhabit, you'll find that people don't know what the heck FriendFeed is - it sounds like a buffet restaurant or something. Here's how BusinessWeek covered the story:

After failing to acquire Twitter last fall, Facebook went shopping for what may be the next best thing.

On Aug. 10, Facebook said it had acquired FriendFeed, the Mountain View (Calif.) social aggregation service founded by Google (GOOG) alumni Bret Taylor and Jim Norris in 2008.

Note something very important here. BusinessWeek users didn't need BusinessWeek to tell them who Twitter, or Facebook, or Google were. But they did need an explanation of what FriendFeed was. So did CNET readers.

In fact, it seems that the Google name is being mentioned more than the FriendFeed name itself. We know that Robert Scoble loves FriendFeed and talks about it often. But when BusinessWeek decided to quote Scoble, the quote didn't even mention FriendFeed:

"In one fell swoop, Facebook gets to buy up Google's best-known superstars," says technology blogger Robert Scoble.

Whatever one may say of journalists, they construct their stories in a specific way, and the fact of the matter is that in this story, FRIENDFEED IS NOT EVEN IMPORTANT. The average reader doesn't know what it is, and doesn't care what it is; all they care about is how this story affects Twitter or uses Google talent.

The sad truth is this - if FriendFeed can't capture the mindspace of general business users, then from a business sense it deserves to die. I certainly don't like this, but I don't have $50 million; Mark Zuckerberg does.

Third, and most importantly, we have to consider what this means for other services.

A few years ago, there was this idea that any software service could grow up and become a huge monolith. CompuServe was at one point a huge monolith, and then AOL grew up to be bigger than CompuServe. Yahoo was huge, and then Google grew up to be even bigger. Friendster was immense, but then was surpassed by MySpace, who was then surpassed by Facebook.

I suspect that those days are over. FriendFeed couldn't make it on its own, and I suspect that Twitter won't make it on its own either. We're probably going to see a consolidation in the services industry, as the Larry Ellisons and the Steve Ballmers and the Mark Zuckerbergs and perhaps the Rupert Murdochs cherry pick the smaller companies (and in some cases the larger companies) and merge them into their own empires. At least for the next few years, I predict that the chance of someone starting a monolithic scene-changing company from a garage will be next to nil.

If I'm wrong, please use the comments to tell me why.
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